Mr. Prem Watsa reports

FAIRFAX INDIA HOLDINGS CORPORATION: FINANCIAL RESULTS FOR THE FIRST QUARTER

Fairfax Financial Holdings Ltd. had net earnings of $776.5-million ($30.82 net earnings per diluted share after payment of preferred share dividends) in the first quarter of 2024, primarily reflecting increased adjusted operating income of $977.1-million. Book value per basic share at March 31, 2024, was $945.44, compared with $939.65 at Dec. 31, 2023 (an increase of 2.3 per cent adjusted for the $15 per common share dividend paid in the first quarter of 2024).

(Note that all dollar amounts in this news release are expressed in U.S. dollars except as otherwise noted. The financial results are derived from unaudited interim consolidated financial statements for the three months ended March 31, 2024, prepared in accordance with international financial reporting standards (IFRS) as issued by the International Accounting Standards Board. This news release contains certain non-GAAP (generally accepted accounting principles) and other financial measures, including underwriting profit (loss), adjusted operating income (loss), combined ratio (both discounted and undiscounted), book value per basic share, total debt to total capital ratio excluding non-insurance companies and excess (deficiency) of fair value over carrying value, that do not have a prescribed meaning under IFRS accounting standards and may not be comparable with similar financial measures presented by other issuers. See the glossary of non-GAAP and other financial measures in the company's interim report for the three months ended March 31, 2024.)

"In the first quarter of 2024, our property and casualty insurance and reinsurance operations produced adjusted operating income of $977.1-million up from $843.0-million in the first quarter of 2023 (or operating income of $1,415.5-million (2023 -- $1,309.3-million), including the benefit of discounting, net of a risk adjustment on claims), primarily reflecting increased interest and dividends, and strong core underwriting performance. All of our insurance and reinsurance reporting segments continued to achieve undiscounted combined ratios below 100 per cent for a consolidated combined ratio of 93.6 per cent and consolidated underwriting profit of $373.0-million, both on an undiscounted basis. Gross premiums written grew by 12.8 per cent and net premiums written grew by 11.2 per cent, reflecting the acquisition of Gulf Insurance, which added $649.5-million in gross premiums written and $334.0-million in net premiums written. Excluding Gulf Insurance gross premiums written were up 3.6 per cent and net premiums written were up 5.3 per cent.

"Net losses on investments of $58.5-million in the quarter was principally comprised of mark-to-market losses on bonds of $318.8-million due to continued rising interest rates, which were largely offset by mark to market gains on common stocks of $275.1-million.

"We remain focused on being soundly financed and, with our recent $1-billion 30-year debt issuance, we ended the quarter with approximately $2.5-billion in cash and marketable securities in the holding company (excluding investments in associates and consolidated non-insurance companies of $1.7-billion owned by the holding company)," said Prem Watsa, chairman and chief executive officer.

An attached table presents the sources of the company's net earnings in a segment reporting format which the company has consistently used as it believes it assists in understanding Fairfax.

An attached table presents the insurance service result for the property and casualty insurance and reinsurance operations reconciled to underwriting profit, a key performance measure used by the company, and the property and casualty industry in which it operates. The reconciling adjustments are: (i) other insurance operating expenses as presented in the consolidated statement of earnings; (ii) the effects of discounting of losses and ceded losses on claims recorded in the period; and (iii) the effects of the risk adjustment and other, which are presented in insurance service expenses and recoveries of insurance service expenses.

Highlights for the first quarter of 2024 (with comparisons with the first quarter of 2023 except as otherwise noted, and excluding the effects of IFRS 17 when discussing the combined ratio and adjusted operating income) include the following:

• Net premiums written by the property and casualty insurance and reinsurance operations increased 11.2 per cent to $6,249.3-million from $5,619.4-million, while gross premiums written increased by 12.8 per cent, primarily reflecting the consolidation of Gulf Insurance on Dec. 26, 2023, which contributed $334.0-million to net premiums written and $649.5-million to gross premiums written in 2024, continued growth across most operating companies, partially offset by decreases at Odyssey Group (principally reflecting the non-renewal of a significant quota share contract which contributed nominal underwriting profit and decreased U.S. crop insurance).
• The consolidated undiscounted combined ratio of the property and casualty insurance and reinsurance operations was 93.6 per cent, producing an underwriting profit of $373.0-million, compared with an undiscounted combined ratio of 94.0 per cent and an underwriting profit of $313.8-million in 2023, driven by decreased catastrophe losses of $101.4-million or 1.7 combined ratio points in the quarter, partially offset by a higher underwriting expense ratio due to investments in personnel and technology to support continued growth in business volumes.
• Adjusted operating income (which excludes the benefit of discounting, net of a risk adjustment on claims) of the property and casualty insurance and reinsurance operations increased by 15.9 per cent to $977.1-million from $843.0-million, principally due to increased interest and dividends and strong underwriting profit.
• The company recorded a total net benefit of $273.0-million related to IFRS 17, which comprised a net benefit of $439.0-million from discounting losses and ceded losses on claims recorded in the period, net of changes in risk adjustment and other, partially offset by net finance expense from insurance contracts and reinsurance contract assets held of $166.0-million (which included interest accretion from unwinding the effects of discounting associated with net losses on claim payments made of $358.3-million, partially offset by the benefit of modest increases in discount rates during the period on prior-year net losses on claims of $192.3-million). The benefit of the effect of increases in discount rates on prior-year net losses on claims of $192.3-million partially offset net losses recorded on the company's bond portfolio of $318.8-million.
• Consolidated interest and dividends increased significantly from $382.3-million to $589.8-million (comprising interest and dividends of $500.5-million (2023 -- $311.5-million) earned by the investment portfolios of the property and casualty insurance and reinsurance operations, with the remainder earned by life insurance and runoff, non-insurance companies and corporate and other). At March 31, 2024, the company's insurance and reinsurance companies held portfolio investments of $60.7-billion (excluding Fairfax India's portfolio of $2.0-billion), of which $7.8-billion was in cash and short-term investments, representing 12.9 per cent of those portfolio investments. During the first quarter of 2024, the company used net proceeds from sales and maturities of U.S. treasuries to purchase cash equivalent U.S. treasury bills, $374.3-million of other government bonds and $140.0-million of short-dated first mortgage loans.
• Consolidated share of profit of associates of $127.7-million principally reflected share of profit of $79.3-million from Eurobank, $36.0-million from EXCO Resources and $34.8-million from Poseidon, partially offset by share of loss of $28.6-million from Helios Fairfax Partners.
• Net losses on investments of $58.5-million consisted of net gains (losses) on equity exposures, bonds and other, as shown in an attached table.

Highlights continued:

• Net losses on bonds of $318.8-million principally reflected net losses of $266.6-million on U.S. treasuries.
• Net gains on equity exposures of $275.1-million principally reflected a net gain of $330.6-million on the company's continued holdings of equity total return swaps on 1,964,155 Fairfax subordinate voting shares with an original notional amount of $732.5-million ($935.0-million (Canadian)) or $372.96 ($476.03 (Canadian)) per share.
• The company's fixed income portfolio is conservatively positioned with effectively 70 per cent of the fixed income portfolio invested in government bonds and 20 per cent in high-quality corporate bonds, primarily short dated.
• At March 31, 2024, the excess of fair value over carrying value of investments in non-insurance associates and consolidated non-insurance subsidiaries was $1,185.6-million.
• On March 22, 2024, the company completed an offering of $1.0-billion principal amount of 6.350 per cent unsecured senior notes due 2054.
• The company's total debt to total capital ratio, excluding non-insurance companies, increased to 24.4 per cent at March 31, 2024, compared with 23.1 per cent at Dec. 31, 2023, principally reflecting the issuance of senior notes due 2054.
• During the first quarter of 2024, the company purchased 240,734 of its subordinate voting shares for cancellation at an aggregate cost of $260.3-million.

At March 31, 2024, there were 22,831,173 common shares effectively outstanding.

As previously announced, Fairfax will hold a conference call to discuss its first quarter 2024 results at 8:30 a.m. Eastern Time on Friday, May 3, 2024. The call, consisting of a presentation by the company followed by a question period, may be accessed at 1-888-390-0867 (Canada or the United States) or 1-212-547-0141 (international) with the passcode Fairfax. A replay of the call will be available from shortly after the termination of the call until 5 p.m. Eastern Time on Friday, May 17, 2024. The replay may be accessed at 1-866-361-4943 (Canada or the U.S.) or 1-203-369-0191 (international).

Fairfax is a holding company that, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and the associated investment management.

We seek Safe Harbor.